Fracking spurs a rust belt rebound in manufacturing

Waist-high weeds and a crumbling old Chevy mark the entrance to a rust-colored factory complex on the edge of town here, seemingly another monument to the passing of the golden age of American industry.

But deep inside the 14-acre site, the thwack-thwack-thwack sound of metal on metal tells a different story.

“We’re holding our own,” said Greg Hess, who is looking to hire draftsmen and machine operators at the company he runs, Youngstown Bending and Rolling. “I feel good that we saved this place from the wrecking ball.”

The turnaround is part of a transformation spreading across the heartland of the nation, driven by a surge in domestic oil and gas production that is changing the economic calculus for old industries and downtrodden cities alike.

Here in Ohio, in an arc stretching south from Youngstown past Canton and into the rural parts of the state where much of the natural gas is being drawn from shale deep underground, entire sectors like manufacturing, hotels, real estate and even law are being reshaped. A series of recent economic indicators, including factory hiring, shows momentum building nationally in the manufacturing sector.

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New energy production is “a real game-changer in terms of the U.S. economy,” said Katy George, who leads the global manufacturing practice at McKinsey & Company, the consulting firm. “It also creates an opportunity for regions of the country to renew themselves.”

The environmental consequences of the American energy boom and the unconventional drilling techniques that have made it possible are being fiercely debated nationwide. New York officials have imposed a moratorium on hydro-fracking, or fracking, because of concerns that the fluids injected into the shale to free oil and natural gas deposits might contaminate the local drinking water.

Although that danger worries environmentalists here as well, there has been much less opposition because residents are so desperate for the kind of economic growth that fracking can bring, whatever the risks.

Vallourec, a French industrial giant, recently completed a million-square-foot plant in Youngstown to make steel pipes for the energy industry, the first mill of its kind to open here in 50 years. The facility, which cost $1.1 billion to build,will be joined next year by a smaller $80 million Vallourec plant making pipe connectors.

The change is evident in the once-moribund downtowns of northeastern Ohio cities as well as in the economic data for the state as a whole.

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Ohio’s unemployment rate in July was 5.7 percent, well below the national average of 6.1 percent. That’s a sharp reversal of the situation four years ago, when unemployment in Ohio hit 10.6 percent, significantly above the country’s overall jobless rate at the time, as manufacturers here and elsewhere hemorrhaged jobs. In the Youngstown area, the jobless rate in July was 6.7 percent, compared with 13.3 percent in early 2010.

“Both Youngstown and Canton are places which experienced nothing but disinvestment for 40 years,” said Ned Hill, a professor of economic development at Cleveland State University. Now, “they’re not ghost towns anymore. You actually have to go into reverse to find a parking spot downtown.”

Youngstown and surrounding Mahoning County is hardly Silicon Valley or even Pittsburgh,which long ago bade farewell to its industrial past and sought out growth in new sectors like health care and education. Broad swaths of Youngstown look almost rural, the result of a decade-long campaign to tear down abandoned homes and factories, letting sites that were once eyesores return to nature.

And the new factories that have gone up — like Vallourec’s new complex, or a $13.2 million plant that Exterran opened in May 2013 to make oil and gas production equipment for local customers — employ only a fraction of the workers who once labored at Youngstown’s mills. Vallourec’s state-of-the-art pipe mill has about 350 workers; the old Youngstown Sheet & Tube plant that once stood on the site had a work force of 1,400 when it shut down in 1979.

But the improvement is undeniable, especially to those who grew up here. “It’s a night-and-day difference,” said Robert E. Roland, a Youngstown native who moved away when he was 18, and is now managing partner at one of Canton’s biggest law firms, Day Ketterer. “It was extremely depressed, and nobody was downtown except for people who were down and out.”

via Fracking spurs a rust belt rebound in manufacturing.